There is 65GW of energy storage on the system by 2050

The FES Consumer Transformation scenario (2023) will put 35GW of storage on the system by 2050, but we think that's not enough.

The 2023 CM auctions (a good way of assessing how many projects are at a stage where the developers are confident they'll get built as non-delivery penalties are high) show 12GW of battery storage by 2027.

Let's consider the global growth of energy storage, as put by Michael Liebreich:

The same thing has been happening for batteries – they have in fact been racing through doublings even faster than solar: five of them in the last eight years. In 2015, some 36GWh of lithium-ion batteries were produced; last year the total was around 1TWh. Over the past decade, cell costs have come down from $1,000 to $72 per kWh, and at the same time energy density has doubled and degradation per cycle has halved. We are also seeing new battery chemistries such as iron-air and sodium-ion that promise to be even cheaper than lithium-ion.

Battery storage is the only non-subsidized, commercially proven, scaled technology that can manage renewable intermittency, grid constraints, balancing, etc. We think going from 12GW in 2027 to the FES number of 35GW in 2050 is an underestimation of the build-out, and we believe 50GW is closer to the mark.

In addition, when we run the model with 23GW of storage (the 2022 FES capacities), we get significant hours (around 20 hours per year) of lost load, particularly post-2035. This leads to revenues for storage of upwards of £300k/MW/year (or more). If the grid is that constrained, and storage revenues are (as a result) very high, more storage will get built - so the buildout figure will be higher.

The duration of storage is fit to previous behaviors. Longer duration assets will be built to deal with longer periods of low or high prices driven by renewable intermittency.

Pumped storage capacity will grow

The FES says that an additional 3GW of pumped storage will come online in the early 2030s. This is largely driven by a significant new project (Coire Glas) in Scotland and the conversion of smaller hydro sites to pumped hydro.

Other storage will come online

Mid-duration (4 hours +) will come online in the late 2020s. The 2022 FES scenario does not have any long-duration storage in it.

What’s Next

Next we look at the other big tech type for flexibility: interconnectors.